Crossed lines in Telstra debate

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The Prime Minister, John Howard, says Telstra's senior
executives should talk the company up, not down. Shareholders
would, no doubt, be happier if Telstra's bosses did not talk at
all. Silence would be, if not golden, at least less damaging to the
share price. However, when management does talk, its job is not to
talk up or down but to talk straight. Telstra is not sideshow
alley, and the managers are not spruikers.

Mr Howard's comment exemplifies the Government's continuing
problem in trying to reconcile its differing roles as shareholder,
regulator and the ultimate guarantor of services. As the biggest
shareholder, it wants to see growth in the billions of dollars it
has tied up in Telstra. So when Mr Howard tells Parliament he wants
Telstra's senior executives to talk up the company, he appears to
be the worried stockholder, concerned at the rapidly waning price
of shares he keenly wants to sell. It certainly does not sound like
the objectivity expected of a prime minister. Yet the Government
must also be the dispassionate regulator, creating a fair
legislative environment for all telecommunications
companies. On top of that, it has a responsibility as the national
government to see that all Australians have a decent standard of
telecommunications - with potentially dire political consequences
if it does not.

The Government's conflict of interest is just as evident in the
row over the briefing paper Telstra presented to cabinet on August
11, which has now been widely leaked. Telstra was seeking billions
of dollars from the Government to make up for years of
underspending on its network. The brief says Telstra is in no
position to put up all the money itself because it has even been
dipping into its reserves just to maintain dividends. These are
perfectly reasonable revelations to support a confidential pitch to
the Government for money. However, the Government is also the major
shareholder, so now the regulatory authorities will want to know
why smaller shareholders were not given the same important
information.

While the Government looks increasingly in a muddle, Telstra
seems quite clear-eyed about what it wants: less regulation, and
all telcos to operate under the same rules, especially when it
comes to subsidising services. As a shareholder and regulator, the
Government should endorse that. The politics, however, mean that it
is instead talking of more regulation and heavier obligations for
Telstra.

The Government needs to clarify its role by quitting its 51.8
per cent Telstra shareholding. Yet it will not be able to sell at
the price it wants any time soon - Telstra's grim warnings about
its financial performance have seen to that. Instead of a sale, the
Government could profitably revisit the idea of transferring most
of its Telstra shares to the planned Future Fund. The idea of the
fund is to build up assets to meet the Government's superannuation
obligations. The fund, which would be run by an independent board,
could sell its Telstra shares as and when it saw fit - without
reference to the Government.

In the meantime, the public slanging needs to stop. The
Government needs to govern. Telstra's chiefs need to manage.
Everybody needs to get back to the business they do best.

Keep our pledge to the world's poor

... even if it offends the US

The Australian Government should reject a call from the United
States to water down the global pact to reduce extreme poverty. In
2000 Australia and other United Nations members made a pledge to
the so-called millennium development goals. They set out eight
targets for reducing poverty, including halving the number of
people living on $US1 a day by 2015. The declaration said: "We will
spare no effort to free our fellow men, women and children from the
abject and dehumanising conditions of extreme poverty." However,
the international commitment to these goals is looking shaky.

Next week, the Prime Minister, John Howard, is expected to
attend a special UN summit to, among other things, evaluate and
reinvigorate the international effort to achieve the millennium
development goals. But the US now wants to delete references to the
millennium development goals from the draft resolution to be
approved by the UN summit in a bid to exempt rich nations from any
timetable on foreign aid. If successful, the US amendments would
dilute the international effort to reduce global poverty.

Two months ago the G8 meeting in Scotland raised expectations
that rich, powerful nations would do more to assist the world's
poor. This month's UN summit has the potential to add fresh impetus
to the cause. Mr Howard has rightly argued the economic prospects
of many poor countries would be advanced by trade reform,
especially lowering the barriers to agricultural exports raised by
many rich nations. But trade liberalisation must be accompanied by
more aid spending. Some African countries have little chance of
achieving the millennium development goals within the century, let
alone within the next decade.

Australia spends just 0.28 per cent of gross national income on
overseas aid, well below many other rich countries. We must do
better. The UN summit promises one of the most important
international gatherings of the year and must not be derailed by
American unilateralism. The ambivalence of the Bush Administration
towards the UN should not distract other countries from bolstering
efforts to achieve the millennium development goals. The Australian
Government should side with the poor, not the US, on this issue and
fight for the retention of the millennium development goals within
the UN summit resolution. Mr Howard must stand by the commitment
Australia made to the goals in 2000 and reject the US bid to
downgrade this unique international effort to help the world's most
vulnerable.